Mondi to benefit from acquisitions

Companies / 21 February 2013, 2:08pm

A general view of the Mondi paper factory is seen in Merebank in Durban.

Johannesburg - Mondi, the largest maker of office paper in Europe and South Africa, said its 2013 performance would benefit from new acquisitions running at full capacity after earnings fell almost 9 percent last year.

“The year has started off well,” Chief Executive Officer David Hathorn said on a conference call today, adding that the company would focus on integrating newly acquired companies and improving their performance.

Mondi, listed in Johannesburg and London after a 2007 spinoff from Anglo American Plc, posted an 8.7 percent decline in 2012 underlying operating profit to 568 million euros ($749 million), compared with 622 million euros a year earlier.

Sales rose 1.2 percent to 5.8 billion euros, the company said in a statement today, adding that a better pricing environment in the fourth quarter helped offset a weak start to the year.

The company is expanding in emerging markets to help drive growth.

It bought Greven, Germany-based Nordenia from Oaktree Capital Management LP in July to strengthen its position in eastern European markets that are growing faster than its African base.

Mondi also bought two corrugated-box plants and a recycled- containerboard mill in Germany and the Czech Republic from Austria’s Duropack AG for 125 million euros in September.

Challenging Environment

Mondi’s 20-million euro investment in China will be completed by the end of this year, creating potential revenue of as much as 200 million euros, Hathorn said.

Mondi, which operates 102 plants across 30 countries, is “encouraged” by the “opportunity to extract value from acquisitions” he said, adding there will be “some rationalisation” resulting in no more than 200 job losses.

A challenging business environment in southern and western Europe is being offset by “positive” sentiment in central and eastern Europe, Hathorn said.

Mondi shares declined as much as 4.9 percent in Johannesburg, the biggest intraday fall in almost a month, before recovering to trade 0.1 percent higher at 113.6 rand by 1.19 p.m.

About 433,000 shares changed hands, more than 1.3 times the three month daily average, according to data compiled by Bloomberg.

The Johannesburg-listed stock has gained 23 percent this year, making it the fourth-best performing stock of the 165-member FTSE/JSE Africa All-Share Index.